Beleaguered airline Regional Express will introduce daily and twice daily return flights from Sydney to Albury in July, despite maintaining there is not sufficient demand for the "financially unsustainable" service.
On Friday, Qantas revealed by June 30 its flights from Sydney to Albury would triple, from two return flights a week to six.
Rex chief operating officer Neville Howell said the company was compelled to match Qantas' announcement "so as not to be squeezed out of the market".
Under the change Rex will offer a daily return flight from Sydney to Albury, and twice-daily flights Wednesday to Friday. No changes will occur on the Albury to Melbourne route.
This week Rex is only operating return flights to Sydney on Tuesday and Friday.
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"It is with great reluctance that we are adding so much additional flying so soon that doesn't match demand," he said.
"The outcome may result in both carriers doubling or tripling their losses on these routes."
Mr Howell said the company was currently experiencing a 90 per cent drop in passenger numbers.
"This move does not make economic sense," he said.
"Rex can ill afford to sustain prolonged periods of heavy losses on these competitive routes, however Rex has no choice but to stand its ground."
Airplanes are currently flying with reduced passenger capacity due to social distancing restrictions.
Albury mayor Kevin Mack welcomed the news.
"Any good healthy competition is fine with us," he said.
"It's one of the worst areas where we've been hit the most in relation to COVID-19, so from a commercial perspective more flights in and out of Albury will make a difference to our bottom line."
In April Virgin Australia went into administration, ladening Albury Council an estimated $300,000 of debt. Council has not confirmed the amount.
Tourism North East's chief executive Bess Nolan-Cook said the extra flights could help boost tourism.
"Anything we can do to connect people with the region especially regional Victoria will be a really wonderful thing for tourism," she said. "We're thrilled to be able to welcome people back to the area."